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Can you quantify the financial impact of your maintenance program on your business? Do you take into account not only the direct costs of maintaining equipment, such as labour and parts, but also the costs of not maintaining equipment effectively, such as unplanned downtime, equipment failures and production losses?

The total financial impact of maintenance can be difficult to measure, yet it is a very valuable task to undertake. It is the first step in finding ways to improve profit and loss. In other words, it is the first step towards an optimised maintenance strategy.

In a 2001 study of maintenance costs for six open pit mines in Chile [1], maintenance costs were found to average 44% of mining costs. It’s a significant figure, and it highlights the direct relationship between maintenance and the financial performance of mines. More recently, a 2013 Industry Mining Intelligence and Benchmarking study [2] reported that mining equipment productivity has decreased 18% since 2007; and it fell 5% in 2013 alone. Besides payload, operating time was a key factor.  

So how do you know if you are spending too much or too little on maintenance? Certainly, Industry Benchmarks provide a guide. In manufacturing best practice, benchmarks are less than 10% of the total manufacturing costs, or less than 3% of asset replacement value [3].

While these benchmarks may be useful, a more effective way to answer the question is to look at the symptoms of over- or under-spending in maintenance. After all, benchmarks cannot take into account your unique history and circumstance.

Symptoms of under-spending on maintenance include:

  • Rising ‘hidden failure costs’ due to lost production
  • Safety or environmental risks and events
  • Equipment damage
  • Reputation damage
  • Waiting time for spares
  • Higher spares logistics cost
  • Lower labour utilisation
  • Delays to product shipments
  • Stockpile depletion or stock outs

Other symptoms are explored in more detail in our guide: 5 Symptoms Your Maintenance Strategy Needs Optimizing.

Man in front of computer screen

Figure 1

In most cases, it is these ‘hidden failure costs’ that have the most impact on your bottom line. These costs can be many times higher than the direct cost of maintenance – causing significant and unanticipated business disruption. As such, it is very important to find ways to measure the effects of not spending enough on maintaining equipment.

Various tools and software exist to help simulate the scenarios that can play out when equipment is damaged, fails or, conversely, is proactively maintained. A Failure Modes Effects and Criticality Analysis (FMECA) is a proven methodology for evaluating all the likely failure modes for a piece of equipment, along with the consequences of those failure modes.

Extending the FMECA to Reliability Centred Maintenance (RCM) provides guidance on the optimum choice of maintenance task. Combining RCM with a simulation engine allows rapid feedback on the worth of maintenance and the financial impact of not performing maintenance.

Armed with the information gathered in these analyses, you will gain a clear picture of the optimum costs of maintenance for particular equipment – and can use the data to test different ways to reduce costs. It may be that there are redundant maintenance plans that can be removed; or a maintenance schedule that can become more efficient and effective; or opportunity costs associated with a particular turnaround frequency and duration. Perhaps it is more beneficial to replace equipment rather than continue to maintain it.

It’s all about optimising plant performance for peak production; while minimising the risk of failure for key pieces of equipment. Get it right, and overall business costs will fall.

Want to read on? Download our guide: 5 Symptoms Your Maintenance Strategy Needs Optimizing.

 

[1] Knights, P.F. and Oyanander, P (2005, Jun) “Best-in-class maintenance benchmarks in Chilean open pit mines”, The CIM Bulletin, p 93

[2] PwC (2013, Dec) “PwC’s Mining Intelligence and Benchmarking, Service Overview”, www.pwc.com.au

[3] http://www.maintenancebenchmarking.com/best_practice_maintenance.htm

Figure 1:  This image shows Isograph’s RCMCostTM software module which is part of their Availability WorkbenchTM. Availability Workbench, Reliability Workbench, FaultTree+, Hazop+ and NAP are registered trademarks of Isograph Software. ARMS Reliability are authorized distributors, trainers and implementors.

While there are three main reasons organizations typically perform Root Cause Analysis (RCA) following an issue with their asset or equipment, there are a whole host of other indicators that RCA should be performed.Cartoon_Man/HardHat

Odds are, you’re recording a lot of valuable information about the performance of your equipment – information that could reveal opportunities to perform an RCA, find causes, and implement solutions that will solve recurring problems and improve operations. But are you using your recorded information to this extent?

First, let’s quickly talk about three reasons why RCA is typically performed:

1. Because you have to

There may be a regulatory requirement to demonstrate that you are doing something about a problem that’s occurred.

2. You have breached a trigger point

Your own company has identified the triggers for significant incidents that warrant root cause analysis.

3. Because you want to

An opportunity has presented itself to make changes for the better. Or perhaps you’ve decided you simply don’t want to lose so much money all the time.

At the core of all industry is the desire to make money. Anything that negatively impacts this goal is usually attacked by performing root cause analysis.Oil And Gas Pipelines

I was having a conversation with a reliability engineer at an oil and gas site, and I asked him what lost opportunity or downtime might cost that company over the course of a year. He said it was in the vicinity of three quarters of a billion dollars – $750,000,000. Is this a good enough reason to perform root cause analysis? Even a 10% change would have a huge impact on bottom line figures.

The monetary impact to the business was of course not due to any single event, but to a multitude of events both large and small.

Each event presents itself as an opportunity to learn and to make any changes necessary to prevent its reoccurrence. Once can be written off as happenstance… things happen, serious or minor, and that’s life. But to let it happen continuously means that something is seriously wrong.

While these are all valid reasons to perform an RCA, there are at least ten more tell-tale equipment-related clues that an RCA needs to happen – most of which can be identified through the information you’re probably already recording.

Here are ten tell-tale signs that your organisation needs to perform Root Cause Analysis:

  1. Increased downtime to plant, equipment or process.
  2. Increase in recurring failures.
  3. Increase in overtime due to unplanned failures.
  4. Increase in the number of trigger events.
  5. Less availability of equipment.
  6. High level of reactive maintenance.
  7. Lack of time… simply can’t do everything that needs doing.
  8. Increase in the number of serious events… nearing the top of the pyramid.
  9. Longer planned “shut” durations.
  10. More frequent “shut” requirement.

These indicators imply that we need to be doing more in the realm of root cause analysis before these issues snowball.

If you can identify with some of these pain points, download our eBook “11 Problems With Your RCA Process and How to Fix Them” in which we provide best practice advice on using RCA to help eliminate some of these problems.

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ARMS Reliability are getting ready for the annual AMPEAK conference this June. ARMS will be presenting and exhibiting at this event.

Michael Moulton, Software Sales & Training

The AMPEAK conference has been organized by the Asset Management Council Australia.  Over 4 days, 300+ asset management and maintenance professionals from Australia and around the globe will receive access to the most up-to-date asset management information across a broad range of industries via presentations, tutorials and workshops.

WA Lead Engineer, Weylon Malek, will be presenting ‘Production Reliability Analysis to Improve Asset Management’, and Apollo Trainer and Facilitator, Jack Jager, will be presenting ‘6 Critical Steps for Facilitating a Successful Root Cause Analysis.

You can see Weylon’s presentation on Tuesday, 3rd June at 1.30pm, and Jack’s presentation on Thursday 5th June at 11.30am.

Don’t forget to stop by the Exhibit area where you can see Michael Moulton at the ARMS booth.

Conference Details:
Perth, WA | 2-5 June | Crown Convention Centre

AMPEAK Conference Website

ARMS Reliability’s CEO, Mick Drew, recently attended the COO Leaders Resources Summit held on the Gold Coast. The summit included a number of the resource sectors most influential executive management and operators, and was two days of corporate and management level discussions concerning some of the most important issues currently facing the Australian resources sector.

Mick Drew said, “It was great opportunity to engage in frank discussions with some of the industry’s leaders. They told us more about their unique challenges, and what issues are impacting their companies.” Mick continued, “They wanted to understand more how we can use our expertise and experience to make a positive change to their maintenance practices, asset management and bottom line.”

From the various panel discussions, workshops, and one-on-one meetings, it was clear there is high demand for experts in Reliability & Maintenance who are able to offer guidance and clarity around the key challenges and issues facing the mining industry. Read More →

Become part of a vibrant community that will share knowledge, experience and innovation.

Mainstream ConferenceMainstream 2014 kicks off in Perth on Monday, 12th May. It’s an exciting event where Asset Management leaders and teams come together to share knowledge, experience and innovation.

Mainstream is different to other asset management conferences; it’s an interactive experience rather than a sit-and-listen event. With 40+ sessions, workshops, roundtables, panel discussions and live interviews, you’re sure to find a session that will be of interest to you. Read More →

Landmark product release puts users of Isograph’s Availability Workbench™ just one click away from saving even more time, energy and cost in their asset management and maintenance programs.

Global Reliability and Asset Management consulting firm, ARMS Reliability has released the Reliability Integration Tool – a powerful new software tool with global application in the resource, utilities, power and transport industries.

The Reliability Integration Tool™ equips reliability engineers and asset managers with the power to seamlessly upload and download data between Isograph’s Availability Workbench and their CMMS system. Read More →

Philip Sage – CMRP
Principal Reliability Engineer

If your production processes aren’t firing on all cylinders – and costing your business much more than they should – here is a very fast, very focused solution: the Vulnerability Assessment and Analysis (VAA).

Let’s look at a hypothetical situation. You are the new Director of Reliability for a global company, and you’ve inherited a floating oil production rig in the North Sea. When you start working with the platform team, it quickly becomes obvious that a number of issues are hampering the rig’s performance. Some of these issues are known to the team, others aren’t. Read More →

ARMS Reliability are currently engaged to provide the Asset Management guidance for a Maximo upgrade with a major water utility in Melbourne, Australia. There are many elements to the process that is worth considering if your own organisation is undergoing the same type of project.

The first step was to create the KPI’s and calculations that the maintenance department will be measured against. This is important to ensure that these goals align with the overall organisations objectives. It also dictates the minimum fields that need to be designed into the new CMMS system if they are not available with the out of box solution. Read More →

By Antonie Jacobs, Senior Reliability Engineer, ARMS Reliability

A Practical guide to getting a “ready for implementation” Maintenance Strategy in Capital Equipment Projects.

Same old story • • •

Maintenance strategyThis is my third plant expansion in 10 years. Next week we start with staged commissioning, but there is so much still to do. My Maintenance Planner and Team Leaders are breaking down my door, asking for resources to develop their maintenance strategies and populating our CMMS. We have not even yet finished the previous expansions’ plans! The design company is demobilizing, and the engineers will be occupied for months with process optimisation. And I don’t have approval for my Reliability team yet! It will take years to get the strategies done now that we’ve reached the end of our capital resources!” Read More →

By Jack Jager and Michael Drew

RealityCharting® software is powerful root cause analysis software used to assist facilitators and compliment the Apollo Root Cause AnalysisTM methodology. RealityCharting® is user-friendly and helps people better understand their problems and identify effective solutions that prevent recurrence. It is a tool to help you record and communicate your understanding of the problem. It is also effective in its ability to display your understanding of the problem to others.

Most people respond well to visual stimuli and your ability to present the information in this way is a great opportunity to get buy-in into your problem. It allows people to “see” the understanding of the problem. Read More →